Correlation Between 4Front Ventures and Entourage Health

Can any of the company-specific risk be diversified away by investing in both 4Front Ventures and Entourage Health at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining 4Front Ventures and Entourage Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 4Front Ventures Corp and Entourage Health Corp, you can compare the effects of market volatilities on 4Front Ventures and Entourage Health and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in 4Front Ventures with a short position of Entourage Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4Front Ventures and Entourage Health.

Diversification Opportunities for 4Front Ventures and Entourage Health

0.37

Correlation Coefficient

4Front Ventures  Entourage Health

Weak diversification

The 3 months correlation between 4Front and Entourage is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding 4Front Ventures Corp and Entourage Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entourage Health Corp and 4Front Ventures is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on 4Front Ventures Corp are associated (or correlated) with Entourage Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entourage Health Corp has no effect on the direction of 4Front Ventures i.e., 4Front Ventures and Entourage Health go up and down completely randomly.

Pair Corralation between 4Front Ventures and Entourage Health

Assuming the 90 days horizon 4Front Ventures Corp is expected to under-perform the Entourage Health. But the otc stock apears to be less risky and, when comparing its historical volatility, 4Front Ventures Corp is 1.65 times less risky than Entourage Health. The otc stock trades about -0.01 of its potential returns per unit of risk. The Entourage Health Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.47  in Entourage Health Corp on September 18, 2024 and sell it today you would lose (0.60) from holding Entourage Health Corp or give up 40.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

4Front Ventures Corp  vs.  Entourage Health Corp

4Front Ventures Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 4Front Ventures Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Entourage Health Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entourage Health Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Entourage Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 4Front Ventures and Entourage Health

The main advantage of trading using opposite 4Front Ventures and Entourage Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4Front Ventures position performs unexpectedly, Entourage Health can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Entourage Health will offset losses from the drop in Entourage Health's long position.

The idea behind 4Front Ventures Corp and Entourage Health Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..